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This paper studies an information design problem of a retailer in a two-tier supply chain that procures a single type of product from a supplier. The supplier needs to decide on a production quantity by balancing the shortage cost and the excess inventory holding cost with respect to the retailer’s demand. The retailer’s demand is random but the retailer receives an informative signal about the demand before the supplier sets the production quantity, and places orders after learning the demand realization. The retailer wants to reduce the shortage cost, and to this end she can disclose information about her signal to persuade the supplier to increase production levels. For this setup, we characterize the optimal information disclosure policy of the retailer, and shed light on settings where the retailer strictly benefits from carefully designed information disclosure policies relative to a full- or a no-disclosure policy.

© 2024, INFORMS

We provide a canonical and tractable model of a trade platform enabling buyers and sellers to transact. The platform charges a percentage fee on third-party product sales and decides whether to be "hybrid", like Amazon, by selling its own product. It thereby controls the number of differentiated products (variety) it hosts and their prices. Using the mixed market demand system, we capture interactions between monopolistically competitive sellers and a sizeable platform product. Using long-run aggregative games with free entry, we endogenize seller participation through an aggregate variable manipulated by the platform's fee. We show that a higher quality (or lower cost) of the platform's product increases its market share and the seller fee, and lowers consumer surplus. Banning hybrid mode benefits consumers. The hybrid platform might favor its product and debase third-party products if the own product advantage is sufficiently high. We also provide some tax policy implications.

© 2024 The Author(s). The RAND Journal of Economics published by Wiley Periodicals LLC on behalf of The RAND Corporation.

Alexander and Lorenzo were at a crossroads with their biotech startup, PhagoMed. They had left high-profile positions at Boston Consulting Group (BCG) three years earlier, driven by a bold vision to tackle the global crisis of antibiotic resistance using phages, viruses with the remarkable ability to target specific bacteria. Despite a robust commitment to R&D yielding deeper insights into phage biology, the journey from lab to clinic was frustratingly slow. And with their capital dwindling, they faced the urgent need to reassess their strategic direction and resource allocation.